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Dollar Up, Investors Turn to Safety Over Lingering COVID-19 Fears

ForexJul 20, 2021 06:46
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By Gina Lee

Investing.com – The dollar was up on Tuesday morning in Asia, with investors turning to safe-haven assets as concerns over the impact of COVID-19 outbreaks involving the Delta variant on economic recovery remain. The greenback remained near multi-month highs against its riskier Australian counterpart and the pound, alongside the Japanese yen.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.05% to 92.945 by 1:36 M ET (5:36 AM GMT).

The USD/JPY pair inched up 0.05% to 109.50.

The AUD/USD pair was down 0.22% to 0.7325, as the Reserve Bank of Australia released the minutes from its latest policy meeting earlier in the day. The NZD/USD pair fell 0.53% to 0.6906.

The USD/CNY pair was steady at 6.4892. The People's Bank of China also kept its July loan prime rate (LPR) unchanged for the fifteenth straight month, with the one-year LPR at 3.85% and the five-year LPR at 4.65%.

The GBP/USD pair inched down 0.07% to 1.3662.

The yen surged to 80.05 per Australian dollar during the previous session for the first time since early February 2020, and traded at 80.40 early in the Asian session. It also rallied to an almost three-month high of 149.35 against the pound overnight.

Meanwhile, the dollar strengthened to an almost eight-month high of $0.73225 against its Australian counterpart at the beginning of the trading week, and hit its highest level since early February 2021 at $1.3655 against the pound.

The yen also outpaced the dollar, rising to 109.07 against the U.S. currency on Monday for the first time since late May 2021. A slide in benchmark 10-year U.S. Treasury yields to as low as 1.1740% for the first time since mid-February 2021 also gave the Japanese currency a boost.

Investor concerns over the COVID-19 outbreaks linger, with the reimposition of restrictive measures in some countries triggering worries about the global economic recovery.

In the U.K., the lifting of most COVID-19 restrictions in England on Jul.19 was marred both by Prime Minister Boris Johnson’s self-isolation after Health Minister Sajid Javid tested positive for the virus and rising numbers of daily cases in the country. The rising numbers also prompted the U.S. to warn its citizens against traveling to the U.K.

The Australian city of Sydney also remains under lockdown in an attempt to curb its own COVID-19 outbreak.

"What is likely concerning markets now is... a surge in infections occurring in developed markets with high levels of vaccination," National Australia Bank (OTC:NABZY) analyst Tapas Strickland said in a note.

"That suggests COVID-19 restrictions may need to be in place for longer," delaying the global recovery, the note added.

In other central bank news, the European Central Bank and Bank Indonesia will also hand down their respective policy decision on Thursday.

Dollar Up, Investors Turn to Safety Over Lingering COVID-19 Fears
 

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